Rumored YouTube streaming rental gambit could flop

YouTube is rumored to be in negotiations to offer streaming movie rentals. The …

The unofficial line has been drawn in the sand when it comes to online video: rentals and paid offerings with no commercials are usually offered as downloads that can often be watched on the TV, while streaming movies are usually free and ad-supported while being restricted to the browser. YouTube may attempt to blur that line soon, though, by offering paid rentals from its streaming video site that is known primarily for quirky user-generated content.

YouTube is allegedly already in talks with several major movie studios to offer paid rentals for premium content (aka full-length movies that aren't decades old), according to a recent report in the Wall Street Journal. Those studios include Lions Gate Entertainment, MGM, Sony, and Time Warner, according to the paper's sources, with Universal seemingly missing from the list. The details have yet to be hammered out, but the agreement would generally allow users to stream premium content for a fee (expected to be around $3.99) while other movies will be ad-supported. How will YouTube's plans fit in with (and stand out from) the competition?

The report notes that it's unclear whether users will be able to download movies, but for the time being, the focus remains on streaming. This is where YouTube could trip up, though. How many of you would pay to rent a movie that you could only watch in a browser? (Answer from most of the Ars staff: we wouldn't.)

There are already other ways to rent videos that will go straight to the TV, including iTunes over the Apple TV and Amazon On Demand via TiVo, and are easier for most average users to deal with than an HTPC. A large part of the reason why TV and movies are free and ad-supported on sites like Hulu is because they are relegated to the computer, which is a less-than-ideal viewing situation.

Interpret VP of Strategy and Analysis Michael Gartenberg reminded Ars that other companies (such as Amazon) have experimented with paid streaming models before, but have discovered that the PC isn't the best device for movie viewing. "It fits in the nowhere land between rentals from Apple or Amazon that play across multiple screens, and free ad-supported content," Gartenberg told Ars. "Unless there's some really differentiated content, [the YouTube rumor] feels more like an experiment than a long-term strategy."

This is still firmly in the rumor stage, so there's no telling whether this plan will see the light of day or what shape it would ultimately take. If YouTube plans on making any money from user fees, though, it may want to either be aggressive with exclusive content or break out of the streaming model to compete more directly with more well-established rental services.